Physical vs. virtual cards: What works best for your business?

Margaret Nguyen3 min
Physical vs. virtual cards: What works best for your business?
In this article

Most of us are familiar with physical cards. We use them in our day-to-day lives to buy coffee, groceries, clothes, and more. We even use our physical card numbers and plug them in when shopping online. 

Virtual cards, on the other hand, are a much newer concept. They’re becoming increasingly popular thanks to their security and inability to be lost — there’s nothing to lose!

Physical and virtual cards have their own sets of benefits. Let’s take a look at what those are and why it’s optimal to use both virtual and physical cards. 

What is a virtual card?

If you think of your physical credit card, you’ll likely picture 16 digits embossed on the front.

A virtual credit card is the exact same thing in the sense that it’s associated with 16 digits, but the digits aren’t associated with the permanent numbers printed on your actual card. A virtual card also doesn’t have a physical form. 

Essentially, a virtual card is a digital credit card. It’s designed for one-day use with temporary card numbers anytime you need to make a purchase. 

This allows the numbers associated with your actual credit card account to be hidden. So, in the event of a data breach, your card information (and thus your money) is safe. 

Is it different from a digital wallet? 

Yes, a virtual card is different from a digital wallet, although they operate similarly. 

Examples of a digital wallet include Google Pay and Apple Pay, which store digital versions of your physical cards. They also have the exact same card numbers. 

However, most digital wallets generate temporary card numbers when you make a purchase to ensure your original card number is secure and isn’t exposed to retailers and merchants. 

The downside of digital wallets is that they’re not accepted everywhere. Only retailers that have opted to accept digital wallets (both online and in-store) will accept this payment form, but virtual cards are accepted anywhere you can make an online purchase. 

[Related: How to calculate and improve your ROI in easy steps]

How do they work?

Virtual cards generate a unique card number for transactions you make. That card number can be used once then de-activated or used for ongoing purchases. 

For example, a virtual card number can be issued once for a transaction paying an overseas vendor for a supply order. Or, a virtual card can be issued and used on an ongoing basis to pay recurring charges such as your business’s online subscriptions, utilities, internet payments and more. 

This significantly strengthens the security of your bank account. 

For example, let’s say your business was the victim of a major data breach. Your card number was one of the few that were taken. Neither your money nor your bank account would be affected because the temporary card number that was stolen isn’t the same as the actual 16-digit bank (or physical card) number. 

Virtual card vs. physical card

Although virtual cards are much newer and more innovative than traditional physical cards, it’s actually beneficial for companies to use both. Physical cards can get lost and are less secure, but that doesn’t mean they should be abandoned entirely.

Here are some ways that virtual cards benefit your operations:

  • Add a layer of security

  • Improve spending flexibility

  • Have no need for the physical card

  • Make it easy to manage your finances digitally

  • Manage business and employee spending

  • Improve your control over vendor payments

Should you ditch the physical card?

Using solely virtual cards seems like it would be the best route, but ditching physical cards entirely isn’t ideal. Why? Not all merchants accept virtual cards. 

Imagine you have to take a client out to dinner while overseas — only to discover the merchant only accepts physical cards. In this case, hopefully you have a backup physical card on hand. If you don’t, this could result in an awkward ending. 

Also, fraud is still possible with virtual cards. While they’re far more secure than physical cards, they aren’t immune to fraud.

It’s smartest to use a combination of both physical and virtual cards. This allows your business to take advantage of each channel differently. 

Meet the Airwallex Borderless Card

Alongside an Airwallex Global Business Account, our Borderless Cards are the ideal solution for businesses because we offer a combination of both virtual and physical cards. 

Expect zero international fees and 1% cashback on all domestic transactions. Our virtual visa cards offer these incredible benefits:

And you can completely manage all your cards online, too. Create, freeze, monitor, and cancel employee cards to protect your business from fraud — all through the Airwallex app, if you prefer. 

Airwallex prioritizes the success of your business, which is why we offer both types of cards. If you’re ready to improve your operations, sign up with Airwallex today to get started. 

[Related: Calculating FX rates: Here’s the easiest way]

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Margaret Nguyen

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Airwallex US, LLC (NMLS #1928093) is licensed or authorized to do business as a money transmitter in most states. For some U.S. customers, Airwallex partners with Evolve Bank & Trust (member FDIC) to provide payment and banking services. Texas customers can click here for information about filing complaints about our money transmission or currency exchange products or services.

Airwallex Borderless Card is issued by Community Federal Savings Bank, Member FDIC, pursuant to a license from VISA U.S.A. Inc.

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